All information in this newsletter is to the best of the authorsʼ
knowledge true and accurate. No liability is assumed by the authors, or publishers, for any losses suffered by any
person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior
representative of the firm before acting upon this information.

Work life and private life – implications of social media

In the last decade the use of social media has exponentially expanded. Social media such as Facebook enable
users to interact with large numbers of people, with immediate and permanent impact. Users of social media might
assume that their use of sites such as Facebook in their own time has no relevance to their work life; however,
the
impacts of the use of social media can overflow from a user’s personal life to their work life, with
serious
effects on both employee and employer.

The effects of the use of Facebook in an employee’s own time were recently illustrated in an Employment
Relations Authority (ERA) decision Blylevens v Kidicorp Limited [2014] NZERA Auckland 373. Kidicorp employed Ms
Blylevens as a centre manager. A number of staff and parents made complaints about Ms Blylevens, which Kidicorp
investigated.

During the investigation Ms Blylevens sought assistance from an advocate, Ms Rolston. While representing Ms
Blylevens, Ms Rolston posted derogatory comments on her own business Facebook page. Ms Rolston made various
comments
in two separate posts about Kidicorp, including allegations of Kidicorp “removing unwanted staff”,
“bullying”, describing HR as the “vindictive Kidicorp HR Krew” and stating that Kidicorp
created a “toxic” environment. Ms Blylevens ‘liked’ Ms Rolston’s posts, and
added
her own comment to one of them, noting that it was “an interesting article” and “that as a
parent
looking for childcare it’s good to be informed”.

Ms Blylevens was identified on Facebook as an employee of Kidicorp, and her Facebook friends included other
Kidicorp staff and parents. Ms Blylevens’ ‘like’ of the posts ensured that Ms Rolston’s
derogatory comments were disseminated to a wide audience. Kidicorp had a social media policy that prohibited
employees from posting information that could bring Kidicorp into disrepute or that could cause reputational
damage.
After Kidicorp became aware of Ms Blylevens’ actions in ‘liking’ and commenting on the
derogatory posts, an investigation was launched. Ms Blylevens was dismissed for serious misconduct.

Ms Blylevens challenged her dismissal. The ERA found that her dismissal was justified. Ms Blylevens’
explanation that her ‘likes’ did not endorse or support Ms Rolston’s derogatory posts was
not
accepted. The ERA likened Ms Blylevens’ actions in ‘liking’ and commenting on the posts to
her
standing outside the childcare centre and handing out copies of Ms Rolston’s derogatory comments about
Kidicorp while telling people “here is an interesting article – it is good to be informed”.
The
ERA had no difficulty in finding that Ms Blylevens’ actions breached her employee obligations of
fidelity,
loyalty and good faith.

This case clearly illustrates the need for employees to be mindful that their use of social media in their
private capacity and in their own time may have unexpected implications for their employment. This case also
provides employers with some assurance that if an employee is using social media in a way that may damage an
employer’s reputation, an employer can consider disciplinary action.

Trust law: trustees’ duties – are you at risk?

You might have been asked by a friend or family member to be an independent trustee of a Trust. You may also
have been appointed as an executor of someone’s estate, which will often also make you a trustee of the
estate assets.

Trustees have strict duties to the beneficiaries of the Trust. Most duties are contained in the Trustee Act
1956. In certain situations trustees can be held personally accountable for their actions or for failing to act,
so
it is important trustees understand their rights and obligations.

All trustees must know the terms of the Trust (or the terms of the Will as the case may be), and must ensure
the Trust (or Will) is managed in an efficient and economic manner. Trustees should take all precautions that an
ordinary prudent business person would take in managing similar affairs of his or her own – a trustee
must
act with care and diligence. An independent trustee is not a ‘rubber stamp’, meaning they must not
blindly agree with and follow the instructions of the remaining trustees or settlors; trustees must carefully
consider their decisions.

Trustees have a duty to make prudent investments. This duty applies to the methods trustees use to make the
investment, rather than looking at the actual results of that investment. A failed investment is not necessarily
a
breach of trust as long as the trustees acted prudently when choosing that investment.

Trustees must be impartial. They must consider the needs of each beneficiary and have a duty to manage the
Trust assets in the best interests of those beneficiaries in accordance with the terms of the Trust deed or
Will.
Trustees must avoid being in a position of conflict between their duties to the Trust and its beneficiaries.

Trustees are accountable to beneficiaries. They must keep proper accounting records and may be required to
give beneficiaries information and explanations as to the investment of and dealings with the Trust
property.

A breach of trust by a trustee can mean he or she is personally liable to the beneficiaries for any loss
caused, particularly if it was an intentional breach of trust, dishonesty or negligence that caused loss. If a
trustee can demonstrate that he or she acted honestly and in good faith and that the breach of the terms of the
Trust was unintentional on their part, that trustee would not ordinarily be liable to the beneficiaries for the
consequences of their breach.

When a Trust enters into a contract with a third party the trustees will typically be personally liable to
ensure that the contract is completed. They may have a right to be indemnified from the assets of the Trust
(meaning
the liability they incur will be paid for from the Trust assets); however they will lose that right of indemnity
if
they act in excess of their Trust powers or in breach of their Trust duties. In addition to this, any right to
be
indemnified is only useful if the Trust actually has realisable assets. Recent case law has seen an independent
trustee personally liable for Trust IRD debt, as the remaining trustees had fled the country. While the
independent
trustee had the right to be indemnified, there were no Trust assets left to cover the debt. The independent
trustee
paid the IRD debt using their own funds.

Becoming a permanent resident in New Zealand

The process to apply and become a permanent resident in New Zealand can be complex, difficult and expensive
for some. Depending on your skill base and financial status this process can be fast-tracked if your skills and
investment are sought after.

New Zealand permanent residents are non-citizens who hold a permanent resident visa. A visa is an endorsement
given by the New Zealand Government that the non-New Zealand citizen is allowed to enter, leave or stay in New
Zealand for a specified time and on specific conditions.

There are three types of visas granted in New Zealand under the Immigration Act 2009. Transit Visas, Temporary
Entry Class Visas (consisting of temporary, limited and interim) and Residence Class Visas (resident and
permanent
resident).

New Zealand permanent residents are not New Zealand citizens and therefore are not afforded all the natural
rights New Zealand citizens enjoy, which include standing for public office, being entitled to New Zealand
consular
protection and never being deported from New Zealand.

The first step towards gaining permanent residency is to be accepted to apply for a resident visa by
Immigration New Zealand. The categories that you may apply under consist of:

Skilled Migrant Category - based on specialist skills, qualifications or experience. The person must
also
be aged under 55 years and meet English language, health and character requirements,

Work to Residence Category - for people that have worked for two years on a work visa, meet health
and
character requirements and are from an English speaking background,

Entrepreneur Work Category - for people that want to move New Zealand to buy or start their own
business,

Investment Category - for people that want to invest a large amount of money in New Zealand,

Family Category - for partners, children or parents of New Zealand citizens or resident visa holders,

Samoan Quota Category - for Samoan Citizens, or

Pacific Access Quota - for citizens of Tonga, Tuvalu or Kiribati.

Once the non-citizen has held the resident visa for a period of two years, and held their resident visa in the
last three months consecutively prior to applying, they may apply for a permanent resident visa. The non-citizen
must meet criteria confirming that they are of good character, meet any conditions that the resident visa was
subject to and have met one of the five commitments to New Zealand criteria (which are; spending enough time in
the
country, becoming a tax resident, owning a business, investing in New Zealand or establishing a base).

A permanent resident visa holder is entitled to be granted entry permission into New Zealand at any time
whereas a resident visa holder is only entitled to apply for entry permission, and the usual rights granted to
them
in New Zealand (which include: stay in New Zealand indefinitely, work or study in New Zealand, receive free
health
care etc.) only become effective if entry is granted into New Zealand.

The costs for applying for a resident class visa vary depending on the non-citizen’s country of origin
and whether the application is lodged in or outside of New Zealand and the category in which the resident class
visa
is sought. If you have any queries or wish to seek assistance in order to gain residency, we suggest you contact
a
lawyer with appropriate expertise in immigration law.

The Supreme Court – 10 years on

The Supreme Court, New Zealand’s final court of appeal, recently marked its 10 year anniversary. Before
1 January 2004, the Judicial Committee of the Privy Council in London was New Zealand’s final court of
appeal.

Decisions made in New Zealand Courts before 31 December 2003 still have the right of appeal to the Privy
Council. It is for this reason that appeals such as the Teina Pora case are still being heard in London 10 years
on.

The Court was established to recognise New Zealand’s independence, history and traditions, to enable
important legal matters to be resolved in New Zealand’s unique context and improve access to justice. The
Court will only hear appeals that it considers are in the interests of justice.

The Court was created amid much controversy. There were, amongst other things, concerns that the Court bench
would be politically “stacked” and that it would interfere with Parliament’s role as the
country’s supreme law maker (a common criticism of some foreign jurisdictions). These concerns appear not
to
have eventuated.

In fact, the Court has undoubtedly increased access to justice. In the 1990s, less than 10 appeals per year
were being heard by the Privy Council. In contrast the Court now hears on average more than 20 appeals per year.
In
particular, the Court hears a far greater number of criminal appeals than were heard by the Privy Council.

While arguments about whether or not the right of appeal to the Privy Council should have been abolished may
no longer be useful, at a recent forum held to mark the Court’s anniversary, a number of legal academics
met
with the current Judges of the Court to critique its performance.

A common thread in the discussion was the suggestion that the Court’s decisions be presented with more
clarity. Each of the five Justices who hear an appeal may deliver their own judgment. Although the majority wins
the
day, each individual judgment may have different reasoning, which can make judgments difficult to interpret. It
was
proposed that the Court issue judgments in majority order and consider single judgments for clarity’s
sake.
On the flipside, it was acknowledged that while these differences of opinion can make interpreting a decision
difficult, they can also be useful in future litigation.

The Court’s approach to Treaty issues and criminal cases was applauded. In other areas, the Court was
urged not to equivocate but to develop the law by elaborating clear legal principles and making clear cut
decisions.

Criticism of the Court is the bread and butter of legal academics. Uncertainty about the law is what drives
litigants to Court, thus criticism of the Court’s performance is inevitable. The Court’s relative
infancy must also be considered. However, these criticisms should be viewed in the context of the numerous
decisions
that have been welcomed by the legal profession.

The task for the Court will be to continue to build on and improve its approach in providing clear legal
principles and finality in the law.

The US Foreign Account Tax Compliance Act – an overview

The Foreign Account Compliance Act (FATCA) is United States (US) legislation, passed in March 2010 by the US
Congress. FATCA is a mechanism for the US Inland Revenue Service (IRS) to counter tax evasion, and its
far-reaching
effects are already being felt in New Zealand.

On 12 June 2014, the New Zealand (NZ) and US Governments entered into an intergovernmental agreement (IGA),
whereby the NZ Government agreed to implement legislative changes to pave the way for FATCA compliance by NZ
institutions. The IGA and FATCA then became NZ law on 30 June 2014, through amendment to the Tax Administration
Act
1994.

FATCA requires US citizens or tax residents to report certain foreign assets to the IRS. It also requires
foreign financial institutions (FFIs) to report on assets they hold on behalf of US citizens, tax residents and
some
other US entities. These reporting requirements are intended to act as a cross checking mechanism for the IRS to
combat tax evasion.

Under the IGA there are some NZ specific exemptions from FATCA’s reporting requirements, such as
registered charitable organisations. There are also some limited exemptions from the definition of FFI, such as
for
FFIs with only low value accounts. FFIs will not be required to report on some accounts held by US taxpayers
where
the value of the assets held does not meet an applicable threshold. For example, a standard bank deposit account
held by a US taxpayer with a balance of less than US $50,000 or the equivalent in NZ dollars will not need to be
reported on.

However, in the absence of an exemption, a wide range of institutions are subject to FATCA’s reporting
requirements: banks, insurance companies and private equity firms amongst others.

NZ FFIs that are subject to FATCA reporting requirements will need to achieve “Complying FFI”
status. Where an FFI does not achieve this status, it will be subject to a 30% withholding tax on a number of
different US-sourced revenue streams, for example distributions of interest or sale proceeds.

Moving forward, the NZ Inland Revenue Department (IRD) will provide a secure electronic system for sending and
receiving FATCA reporting from NZ FFIs to the IRS. This will save FFIs from having to each deal with the IRS
directly.

NZ FFIs have been collecting data for reporting since 1 July 2014, and will start providing FATCA reports to
the IRD from 1 April 2015. The final date for exchange of first year reporting between the IRD and IRS will be
30
September 2015, at which time NZ FFIs will need to have provided their first year’s FATCA reporting to
the
IRD.

FATCA has already had, and will continue to have, implications for US citizens, US tax residents and FFIs
alike. Should you have any concerns as to its implications for you or an institution you are involved with, you
should take advice from your legal advisor in conjunction with your tax specialist.

Snippets

New Zealand’s extradition laws – Law Commission review

The Law Commission released its Issues Paper, “Extradition and Mutual Assistance in Criminal
Matters” on 2 December 2014, with submissions on the Paper’s preliminary proposals open until 2
March
2015.

The Paper examined the Extradition Act 1999 and the Mutual Assistance in Criminal Matters Act 1992 (MACMA),
concluding that both need reform to meet the challenges posed by a modern globalised world.

The Paper recommends extradition laws be simplified to a two category approach, with one set of procedures and
requirements for New Zealand’s closest extradition partners, and another set for all other countries.

making MACMA more principle orientated and less technical so as to widen the function of this legislation
in
terms of assisting foreign countries to conduct searches and surveillance under our domestic framework,
and

simplifying the current framework so as to give effect to New Zealand’s international
commitments.

Traffic law - can you bike home from the pub?

You cannot be charged with a drink driving offence under New Zealand law while riding a bicycle, unless it has
a motor. Excess Breath/Blood Alcohol (EBA) charges only apply if you drive or attempt to drive a motor vehicle,
meaning a vehicle drawn or propelled by mechanical power (see sections 2, 11 & 12 of the Land Transport Act
1998
[the LTA]). A bicycle without a motor is not considered a motor vehicle (see Lawrence v Howlett [1952]) nor is a
bicycle with an electric motor of less than 300 watts (see NZ Gazette 25 July 2013).

However, this is not without risk. While EBA charges can only apply while driving motor vehicles, some other
charges, such as careless driving, are not restricted to your activities with vehicles that have motors. Someone
cycling home under the influence could be charged with careless driving if it can be shown they have used their
bicycle carelessly or without reasonable consideration for other persons (see sections 2 & 8 of the
LTA).

If you have any questions about the newsletter items, please Contact Us, we are here to help.